Obtala Resources Limited Operational Update and Cancellation of Warrants (8306Z)
December 16 2014 - 2:00AM
UK Regulatory
TIDMOBT
RNS Number : 8306Z
Obtala Resources Limited
16 December 2014
16 December 2014
Obtala Resources Limited
("Obtala" or the "Company")
(AIM: OBT)
Operational Update and Cancellation of Warrants
Obtala Resources Limited (AIM:OBT), the emerging
agri-processing, farming and timber company, is pleased to provide
an brief update on activities relating to its projects in Africa
and the conclusion of an agreement to cancel certain warrants
issued in 2013.
Timber
The Company has engaged the services of Natural Resources Europe
Limited ("NRE"), a private independent consultancy, to provide
assistance in seeking out suitable partners who can provide third
party harvesting and processing expertise for increased production
capacity and expanded marketing for the concessions in East Africa.
This strategic approach follows on from the valuation report
announced on the 18 June 2014 and will provide a platform from
which value realisation can start to be achieved in 2015. To date
five companies have signed Non-Disclosure Agreements with two
letters of intent received from interested parties.
A site visit is planned for early 2015 with the interested
parties with an agreement to be concluded thereafter. Part of the
programme being developed by NRE is a "Plant-to-Cut" project, which
would run in parallel to the hardwood harvesting and processing
programme. This will give diversification to the existing natural
forest portfolio and provide an important, sustainable long term
revenue stream. This will involve both the Company and the selected
operator establishing a timber plantation on a portion of the
existing concession portfolio.
Plantation establishment is a long term process, taking anything
from 15 years to 30 years depending on the species grown.
Establishing a teak processing facility (sawmill) would provide
employment and economic development in the region and would be
looked on favourably by the international community as well as
Mozambique authorities. Teak is a valuable timber that is in high
demand from India, China and Europe. Relatively unprocessed timber
holds a high value with current market values for good quality
certified plantation teak at around US$ 900/950 per m(3) on a FOB
basis delivered to the local port.
Establishment costs are likely to be in the region of
$3,000/hectare over the first 5 years, thereafter around
$400/hectare. The crops would be thinned 3 times, 5 years apart.
The first is un-commercial, the following two would be commercial
(poles and logs) and would generate a surplus. Final harvesting
would yield around 350 m(3) to 400 m(3) per hectare, 60% would be
higher value log, 20% would be second grade logs and 20% would be
low value timber. A 1,000 hectare plantation would have in the
order of 1.6 million trees which after 5 years would have a
standing stock value in excess of $300 million (based on unofficial
estimates from the consultants), exclusive of the previously
reported June 2014 valuation on the existing hardwood
potential.
Morogoro
Extensive work is being completed on the processing facility to
ensure that it is complaint for food health and safety
certification which is underway. It is anticipated that
certification will be awarded in Q1-2015 with drying and processing
of dried fruits continuing once the upgrade work is complete. The
Company has started delivering into the fresh produce market
(French beans, onions, assorted peppers and chillies, tomatoes,
etc) in Tanzania and has recruited a Marketing and Sales Manager to
facilitate sales direct to the end users, such as hotels, tourist
camps, shipping lines and retail outlets. Global GAP certification
for the farm operations is expected to be complete in Q1 2015.
Plans for a cannery on site continue with an evaluation of the
infrastructure, power and water requirements with a decision on
timing to be made in 2015 once the appraisal is complete.
Lesotho - Cannery
A number of significant upgrades are being completed on the
facility in Maseru, funded by our partner the Lesotho National
Development Corporation. Work is expected to be completed
imminently and BRC certification completed in Q1 2015, opening
access to a wider range of target customers, including the retail
sector. A number of product samples have been sent out to
prospective buyers and a number of local farmers are now planting
crops for production in early 2015.
African Home Stores
Daily sales at the recently purchased retail chain in Lesotho
(announcement of 30 October 2014) are doing well ahead of the
Christmas period. Since assuming control the Company has put into
place improved stock control and inventory monitoring, accounting
procedures tightened up as a new accounting software programme is
integrated into the business, together with a number of successful
sales and promotions. Planning is in place to open up another two
African Home Stores branches in Lesotho and a further unit in
Bloemfontein, South Africa in Q1 2015. Once the new branches have
opened the Company will continue with its goal of opening new shops
in other African countries, initially where we already have an
operational presence.
Mama Jo's
An additional supplier of high quality, fully certified sauce
and fruit products has been identified and orders will be placed in
early 2015 to increase the product range. Current supplies of the
spicy sauce range are being sold into a number of small restaurant
chains and specialist food shops. Dried fruits from Tanzania are
being packaged into small retail sized re-sealable bags which we
have designed, printed and sales of these products have now started
in the outlets in Lesotho.
Cancellation of Warrants
The Company has agreed to buy back two tranches of warrants
issued as part of a placing in early 2013 (announcement made on 20
February, 08 April and 21 May 2013). The warrants have an exercise
price of GBP0.0769 and GBP0.0844 for a total of 8,754,208 ordinary
shares once exercised. The company has agreed to pay the warrant
holder GBP335,000 in two tranches. The first payment made on the
16(th) December with the second payment will be made two month
afterwards. The warrant certificates will then be cancelled thus
avoiding any dilution to existing shareholders and any negative
impact on the current share price.
Paragon Diamonds
As per the announcement of 20(th) November 2014 the Company has
received full settlement for the first tranche of the call option
shares from Titanium Capital Investments limited. Payment and
transfer of the second tranche of 36,000,000 shares will be made by
the 1 March 2015.
Chairman's comment
Simon Rollason, Managing Director, commented: "As a Board we are
pleased to provide this update to our shareholders. We have
remained focused on our objective of creating a vertically
integrated business opportunity in what has been a challenging year
for small cap companies, and are now well placed to see substantial
growth in 2015. The developments on the timber concessions will
provide for increased levels of production and marketing and
underpin the inherent value that this considerable portfolio can
achieve. The "Plant-to-Cut" project will further enhance the timber
valuation and in the future will comprise an important part of the
business. We are hopefully that once internationally recognised
certification is awarded on the different project market
opportunities will expand significantly boosting the underlying
value of the various businesses we have created."
Obtala Resources
Francesco Scolaro - Chairman
Simon Rollason - Managing Director
www.obtalaresources.com +44 (0) 20 7099 1940
ZAI Corporate Finance Limited (Nomad) +44 (0)20 7060 2220
Ray Zimmerman
Richard Morrison
Irina Lomova
Fox-Davies Capital (Broker) +44 (0)20 3463 5000
Jonathan Evans
Square 1 Consulting (Public Relations) +44 (0)20 7929 5599
David Bick
Mark Longson
Natural Resources Europe Limited ("NRE")
NRE was established in August 2012 to bring together the
collective experience and knowledge of over 60 years working in
forestry, farming, commodities and logistics primarily in Africa,
but also globally. This has included working with some the World's
largest companies in this sector. Covering areas such as Canada,
USA, Russia, Brazil, East and West Africa. NRE has developed a
thorough understanding of the process, and logistics inherent in
delivering forest products to the market, in a timely and cost
effective manner. This has included working with people
establishing plantations, for commercial forestry operations,
whilst understanding the changing landscape of sustainability and
regulation that is enforcing the introduction of the best working
practices to ensure forestry plays its part in protecting our
environment.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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